Feb
4
Barely a Whimper
Filed Under B2B, Big Data, Blog, data analytics, Financial services, healthcare, Industry Analysis, internet, Search, semantic web, Uncategorized, Workflow | 1 Comment
British public policy on data availability for commercial re-use died a sad, whimpering, undignified death yesterday. No one noticed. Years of political neglect, and masterful inactivity by the civil service, meant that it had long since ceased to be a public topic. The idea, borne in the Community in Brussels, enshrined in European Directives, cleverly headed by the Brits in terms of passing secondary legislation and apparently wanting to be best in class at data sharing (how often do we see that the way to best inhibit change is to assume its leadership!) probably fell mortally ill some years ago, when the current UK coalition government assumed office, but we only really woke up to the reality yesterday, when the government abolished APPSI – the Advisory Panel on Public Sector Information – to mark the fact (http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2015-02-03/HCWS245/). The idea once engendered that the swiftest way to move our society into the inevitability of the networked world was for government to share data with the private sector, to stimulate national information industries by so doing, and to reap a result in wealth creation, employment and a widening tax base is accepted from the US to China. (Think only of the Peoples Bank working with Alibaba et al to keep non-Chinese credit rating at bay.) It is widely accepted in Europe, and many countries have now moved past the UK in this area. Sadly, poor old Britain caught between blind politicians of all shades and civil servants who saw information as power – to be retained at all costs – has lost out on all fronts.
The bitterness here is personal. As a campaigner and lobbyist I fought the good fight for a decade to get the European legislation through, and when it passed I thought, as I took a seat as a founder member of APPSI, that the battle was largely done. How foolish was that! The high ground of British public information was then – and still is – in the hands of state – owned monopolies whose hugely restrictive licences and high fees have proved a barrier to letting a hundred information flowers bloom, let alone a thousand. The UK has the energy – go and look at the thousands of digital start-ups in Shoreditch if you doubt it – and it has the financial investment muscle. But the catalytic element – being able to mash cheaply available, easily licensed data with third party and proprietary content – is wholly missing. And why is that? Because we have Ordnance Survey, HM Land Registry and countless other public monopolies who have the protection of the Treasury and of departments of state still seeking to flesh out a power base and avoid financing the collection and re-use of public information – that is, information collected at the taxpayer’s expense to perform a public duty enshrined in statute – in a proper networked world manner. When the history is written it will be found that Ordnance Survey on its own has been one of the greatest barriers to change in this sector. And if you think this overstates the issue, reflect that this country, which is about to license fracking for shale gas amidst fears of subsidence, still does not universally license the data which would show you whether your home was in danger of subsidence from historical coal mining. For that, you must go to an office in the North of England, pay a ludicrous fee, sit in a search room armed only with paper and pencil and have a search done. And this useless monopoly is a fiefdom of BIS, Britain’s department for Business!
But do not, whatever you do, blame BIS. They are highly attuned to the importance of public data. So highly attuned that when they privatized the British Post Office in this government, they sold it with the databases containing the post (Zip) codes within it. Sold this data, unpriced, not as a separate entity but lumped in with the postboxes and the delivery vans. Turned a public monopoly into – a private one. No special conditions attached to licencing. And then said afterwards that they did not realise what they had done! With people like this in charge of public policy, an Advisory Panel was certainly redundant. Quite superfluous. Almost embarrassing. Just think what such a panel make of the privatization of HM Land Registry. This was halfway down the slipway last year when the politicians lost their bottle, so it was withdrawn at the last moment. Given the way these public guardians treat public data, it would have made little difference if that became a private entity as well, but at least in that instance there was a chance of defining access conditions and securing standard licensing terms in the course of its change of status. As it is, the Shareholder Executive (designed to protect the public equity in these agencies – why does government always work in complete opposite directions to the intention) and the old villain, HM Treasury, work brilliantly together to fend off the public interest and preserve what once was in the face of what might be.
By now you think you are listening to a lunatic on a cold night shouting at the moon. So let me end with the sensible voice of the leading and authoritative academic commentator in this field, Bob Barr: “In the UK we have ended up with a lazy, counter-productive, business model based on holding public data hostage wherever possible, maximising the short term return from users that can derive the highest value, and pay the highest price, and diligently preventing the maximization of use in order to protect the monopoly rents that the high value users will pay.
However cogent, or otherwise the arguments from APPSI, ODUG and many lobbying and pressure groups before us, and no doubt after us, have been, the hidden hands of the Treasury, and its wicked offspring in ShEx (the Shareholder Executive), have prevailed in private. Their arguments are never publicly articulated. They do not publicly assess the costs and benefits of their approach across the economy as a whole but they have the ear of ministers in governments of all colours, no doubt egged on by the custodians of the data. This advice appears to count for much more than any academic, expert advisory or consultancy arguments articulated in public.”
Now government, which never implemented the data policy and has no policy of its own except no change, has shut down the source of advice. Not just a sad day for this debate, but a sad one for entrepreneurial Britain.
Jan
15
The Ultimate Question is Scale
Filed Under Big Data, Blog, Education, eLearning, Industry Analysis, internet, Publishing, Reed Elsevier, STM, Workflow | 2 Comments
How big do you need to be to succeed? In this age of internet service and content consolidation the urge to be large seems almost irresistible. You have to be big enough to be a one stop shop, or big percentage thereof. You have to be big enough to enable the technology spend, and get its paybacks. As content gets increasingly commoditized, you have to be big enough to move up the value chain with your users, and to buy into innovative smaller players at the right time. Above all, if consolidation is, as I have long maintained leading to information market sectors with two, or three big players and a host of smaller ones, you need to be in the First Division if you aim to influence market behaviour, pricing, access and discoverability rather than be driven by them These thoughts come immediately to mind while thinking about today’s news of the “merger” between Springer and Macmillan.
I have put “merger” in inverted commas because you could also describe this as a German dynastic marriage, or indeed you could describe it as an acquisition, since the architect of the deal, Stefan von Holtzbrinck, ends up holding 53% of the equity. Holtzbrinck, of course, remains a family company and started as a major player in German national and regional newspapers. Like another family company, DMGT, this generation has seen the instability of basing the family wealth solely in newsprint. DMGT, through diversification supported and encouraged by Vere and then Jonathan Harmsworth, is now a B2B company with a minority proportion of its activity in newspapers. The Von Holtzbrinck route was different, but ends in the same place: the minority of its interests are now in scientific information, academic publishing and education. The critical threat that the demise of newspapers would sink the family ship is now over.
And over in a very clever way. Keep “merger” in quotes. While Macmillan always had to get bigger to become a rival to Wiley in a market dominated by Elsevier, Springer always had to sell. It has had so many suitors over the years that it qualified for a place on Parship, the Holtzbrinck dating site. The current relationship with BC Partners is a tertiary private equity deal, something unheard of before this century. But the result of Cinven and Candover buying the decaying hulk of Springer from Bertelsmann was a clean-up, followed by a sale to EQT and GIC. Which was followed by more streamlining and margin improvement and a sale to BC Partners for 3.3 billion euros. There could have been little improvement to be made this time round. Springer had recreated its Springerlink online platform and the company is undoubtedly back amongst the market leaders in terms of profitability, so the only way to go was a trade sale. The solution in this deal is just that, staged to the benefit of both parties. BC get to exit their 47%, possibly via an IPO, in the next three years, at an enhanced valuation secured through the Macmillan assets, and especially Nature Publishing. Holtzbrinck get a satisfying revaluation of their Macmillan purchase when the IPO goes through, and probably an opportunity to grow their stake. So both can go happily hand in hand to the German regulator, and get a big tick for accomplishing one of the prized national objectives – keeping Springer, the historical home of German chemistry as it reshaped late nineteenth century science, as a German company. Finally, as you look at this deal, do the maths. Holtzbrinck have merged into this deal their assets at Macmillan to form a company worth 5 billion euros. Their partner put in a company worth 3.3 billion euros two years ago. Holtzbrinck get 53%, depending on how much debt is left in 2-4 years time , and how much of this the partners decide to turn into equity. Sounds good to me!
It could have been so much worse for Springer, though. The perpetual arranged marriage for Springer was always going to be Informa’s Taylor and Francis. It almost came off twice. but the in-laws came to blows at the altar rail. Then people like me bet on Springer, always underexposed in the US, being merged with Thomson-Reuters Healthcare (now in PE hands as Trueven) or Thomson-Reuters Science (still oddly outside of the parent’s finance-law corporate vertical). Wiley was even mentioned as a possible deal, though this always seemed unlikely. But the new marriage, with a market cap, remember, of around 5 billion euros, has desirable scale, and both players together make a powerful force in Open Access and can use their joint capacity to operate effectively as data publishers as science wants more and more experimental evidence linked to articles and made available on time and alongside.
And of course there is more than science in this deal. The Education interests of Macmillan, with some exceptions, are in the mix, as are the now much diminished B2B interests of Springer. Rather more interesting is what is left out on the Macmillan side. No private equity player looking at a forthcoming marriage of convenience would want to see assets included that were under a cloud or had yet to yield a margin. And Springer’s margins , which the current management have recovered from their previous deeply unimpressive levels , are now above the industry average and almost certainly better than Macmillan. The whole US Higher Education market is fairly cloudy, which may explain the exclusion of Bedford from the deal. Macmillan consumer publishing is just irrelevant to all this. And the seed investment areas are just too far from profitability, so they stay with Holtzbrinck, giving that company another bonus. There are some great growth points in these seed beds. Just imagine, looking at the ReadCube venture in Macmillan Digital Science, the effect of using that platform, already in Wiley and Nature, in Springer. That is the good thing about scale – you can build quickly.
The final question we need to ask is how all this can be managed. Annette Thomas goes onto the Springer board as Chief Science Officer, joining Derk Haank, CEO, Martin Mos (COO) and the Springer CFO. As indicated in the last blog here, Annette’s style has been innovation and adventure. Her Dutch and German colleagues on this board have built through more conservative policies. A big priority has been securing the management team pay-outs that three rewarding deals in 15 years can secure. By some estimates those rewards would now buy a small European country, let alone a farm at Groningen! Such things are not secured by high risk investment. As a team these people are the most experienced STM players anywhere: what we now need to see is how well they perform as a management team. This is not the least interesting part of this deal.
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